Kensington International Ltd. v Republic of the Congo

On an appeal concerning a freezing injunction, the Court of Appeal will not interfere with the first-instance judge’s discretionary decision merely because another course was possible. The appellant must show that the decision was one the judge could not properly have reached or that he misdirected himself. A judge may require notice before hearing an application where the relief has serious coercive consequences, may affect third parties, concerns a foreign state and connected commercial entities, and the evidence does not make immediate dissipation a credible risk. The court may also consider the age of the debt, previous enforcement steps and the opportunity for affected entities to participate.

Kensington International Ltd. obtained summary judgment against the Republic of the Congo for approximately US$56.9 million. Earlier injunctive relief had been refused after a separate hearing. Kensington then applied without notice for a freezing injunction against the Congo and assets associated with its state oil operation, including SNPC UK Ltd and Olearius Ltd.

Morison J declined to hear the application ex parte and directed that notice be given to the relevant parties. Kensington appealed, arguing that the application should have been heard without notice and that the notice period was excessive. The central issue was whether Morison J’s procedural and discretionary decision was one the Court of Appeal could properly disturb.

1. Appeal dismissed. Lord Justice Waller held that the appeal could succeed only if Kensington showed that Morison J had reached a decision which he could not have reached or had misdirected himself. The evidence disclosed no such error. Lord Justice Kay agreed.
2. Morison J was entitled to require notice before considering the freezing injunction. The application was not an ordinary, immediate creditor application. It concerned an old assigned debt, a foreign sovereign, substantial oil-trading operations and entities whose separate interests required consideration. The Congo and the associated entities had already been aware, or ought to have been aware, of Kensington’s enforcement efforts.
3. The relief sought was exceptionally coercive and could realistically operate through pressure on third parties. The judge was entitled to take account of the practical difficulty and undesirability of exposing third parties to penal consequences where the order was directed to the Congo. The evidence also permitted the view that notice was unlikely to produce an immediate and dishonest dissipation of the relevant assets.
4. The Court of Appeal considered that the application had to be assessed in the form actually placed before Morison J. A possible narrower application concerning shares in SNPC UK Ltd and ancillary relief for ordinary trading was not the application under appeal. The proposed challenge to the length of notice was not raised in the notice of appeal and, in any event, could not succeed in the practical circumstances identified by the judge.
5. The order requiring notice to the Congo, SNPC, SNPC UK Ltd and Olearius Ltd stood. Order: appeal dismissed.

• Court of Appeal (Civil Division): In Kensington International Ltd. v Republic of the Congo, [2003] EWCA Civ 709, the appeal against Morison J’s order was dismissed.
• High Court, Queen’s Bench Division, Commercial Court: Morison J declined to hear Kensington’s freezing-injunction application without notice and directed service on the Congo and the associated entities.
• High Court, Queen’s Bench Division, Commercial Court: Tomlinson J refused separate injunctive relief concerning the Congo’s assets and creditor arrangements.
• High Court: Cresswell J granted summary judgment for Kensington against the Congo in the sum of US$56,911,991.